Washington: Two Indian American doctors are among six people charged by the US federal regulator with insider trading in advance of eBay's acquisition of an e-commerce company to reap more than $300,000 in illegal profits.
The Securities and Exchange Commission charged that Suken Shah and his brother Shimul Shah received confidential tips from Christopher Saridakis, the CEO of the marketing solutions division of GSI Commerce, an e-commerce company.
To settle the SEC's charges, Saridakis agreed to an officer-and-director bar and must pay $664,822, which includes a penalty equal to twice the amount of his tippees' profits.
In a parallel action, the US Attorney's Office for the Eastern District of Pennsylvania Friday announced criminal charges against Saridakis, who lives in Delaware.
The SEC alleges that Saridakis separately tipped his friend Suken Shah, a doctor who resides in Wilmington, Delaware, with non-public information about the deal following the March 11 meeting with eBay executives.
Shah earned insider trading profits of $9,838 and provided the non-public information to his brother and another individual, SEC alleged.
Shah agreed to settle the SEC's charges in an administrative proceeding by paying disgorgement of $10,446, which includes $609 in trading profits made by the other individual he tipped.
Shah agreed to pay prejudgment interest of $1,007 and a penalty of $64,965 for a total of $76,418. Shah's penalty is three times the amount of his and his tippees' trading profits.
In a separate settled administrative proceeding, the SEC charged Shimul Shah, a doctor who now resides in Cincinnati, with insider trading on the non-public information he received from his brother.
Besides trading himself, Shah tipped others with the non-public information during a group dinner he attended with several friends from his medical residency, SEC alleged.
To settle the SEC's charges, Shah agreed to disgorge his trading profit of $11,209 and pay prejudgment interest of $1,022 and a penalty of $22,418 for a total of $34,650. Shah's penalty is twice the amount of his trading profit.
The individual who entered into the non-prosecution agreement was tipped by Shah at the group dinner.
This individual has agreed to disgorge a trading profit of $31,777 and pay $2,725 in prejudgment interest for a total of $34,502, SEC said.